Feb. 6 (Bloomberg) -- Senators agreed on an economic stimulus plan to rescue the U.S. economy from sinking into what President Barack Obama warns would be an even deeper recession if Congress doesn't act.

Nebraska Senator Ben Nelson, a Democratic leader of the bipartisan group that worked on the accord, said tonight on the Senate floor that lawmakers worked "line by line, dollar by dollar" to cut the Senate's prior proposal. The plan is "about jobs, jobs, jobs," he said.

A Senate vote on the measure, possibly this weekend, would move Congress closer to Obama's deadline of sending a bill to him by mid-February. A Senate plan must be reconciled with the House- passed $819 billion package. White House Chief of Staff Rahm Emanuel attended a meeting of Senate Democrats on the plan, and he smiled as he left.

HAMADA, Japan - The Hamada Marine Bridge soars majestically over this small fishing harbor, so much larger than the squid boats anchored below that it seems out of place.

And it is not just the bridge. Two decades of generous public works spending have showered this city of 61,000 mostly graying residents with a highway, a two-lane bypass, a university, a prison, a children's art museum, the Sun Village Hamada sports center, a bright red welcome center, a ski resort and an aquarium featuring three ring-blowing Beluga whales.

Nor is this remote port in western Japan unusual. Japan's rural areas have been paved over and filled in with roads, dams and other big infrastructure projects, the legacy of trillions of dollars spent to lift the economy from a severe downturn caused by the bursting of a real estate bubble in the late 1980s. During those nearly two decades, Japan accumulated the largest public debt in the developed world - totaling 180 percent of its $5.5 trillion economy - while failing to generate a convincing recovery.

THERE HAS NEVER BEEN DATA THIS BAD FOR ANY MAJOR ECONOMY - EVEN IN THE GREAT DEPRESSION. December industrial production came in down 9.6%, worse than the METI forecast. It is now down almost 21% year over year. METI forecasts a further 4.7% decline in February. The inventory to production ratio soared again. Maybe METI will be correct.

If it is, Japan industrial production will have fallen 28% (non annualized) in four months. It will have fallen by a third in about a year. Nothing in the history of major nations compares. A 28% decline in four months would be more than half of the entire decline in U.S. industrial production over the 3 years and nine months of the U.S. Great Depression.

WASHINGTON - New jobless claims jumped far more than expected last week in an already dismal labor market, and there's no relief in sight for workers as mass layoffs persist. The Labor Department reported Thursday that the number of newly jobless workers seeking benefits rose last week to a seasonally adjusted 626,000, from the previous week's upwardly revised figure of 591,000. The latest total is far more than analysts' expectations of 583,000.

Feb. 6 (Bloomberg) -- U.S. taxpayers are being shortchanged by about $78 billion through the Treasury Department's bank bailout, the panel overseeing the program said.

The Treasury, when it was headed by Secretary Henry Paulson, received bank assets worth about $176 billion in exchange for capital purchases of $254 billion under the Troubled Asset Relief Program, the Congressional Oversight Panel said in a report today.

"The loss estimate is conservative," said Representative Alan Grayson, a Florida Democrat on the House Financial Services Committee. "It could turn out that those assets in the end are worthless. These are massive handouts to favored institutions to try to make up with taxpayer money the mistakes they made with investor money."

FirstBank Financial Services, McDonough, Georgia, was closed today by the Georgia Department of Banking and Finance, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Regions Bank, Birmingham, Alabama, to assume all of the deposits of FirstBank Financial Services.

Treasury Secretary Timothy Geithner, as expected, will announce on Monday a "comprehensive plan" to stabilize the financial system.

In a noon news conference, Geithner will lay out a "strategy to strengthen our economy by getting credit flowing again to families and businesses," the Treasury said. The plan will include an aid package for the banking industry, according to a well-informed source.

Another routine look using UUP. Hope '09 is certainly posturing and will really get some play if the US dollar drops out of this rise as the fading momentum has been hinting it will do. Still the upside target to resistance remains in play until said breakdown is actual as opposed to hoped for.

Speaking of hope, would it not get an afterburner boost if the Yen drops too? The Yen chart does not look so bullish either with a potential double top and weekly MACD trying to trigger down. As with the buck, nothing is confirmed yet.

The gold price has finally disconnected from its nemesis, the USDollar. This news should be read as the coming of spring after months of wintry torment, or as the sighting of land after 30 days adrift at sea in a derelict vessel. From 2002 to very early 2008, the gold price had risen from the massive speculative fervor that swept the United States and Europe, whose economies had been supplied largely by Asian factories. The mines from Latin America to South Africa to Australia greatly aided the process. The very paradoxical event of the USDollar rising this past autumn amidst truly horrendous news, one disaster after another, one major bank failure after another, one nationalization of a large financial institution after another, makes the disconnect all the sweeter for gold investors. That set the stage for a powerful gold price move. Imagine a notable rise in the buck, based upon broad negative news in August and October!

Recipients of the $700 billion federal bailout package in the finance and auto sectors may view their contributions and lobbying as the smartest investments made in years, according to the Center for Responsive Politics.

More than half of the 300 companies helped by the federal government's Troubled Asset Relief Program (TARP) have dished out $114.2 million for politicking, with $77 million spent on lobbying last year and $37 million spent on federal campaign contributions for the 2008 election.

Those political activities have, in part, yielded the companies $305.2 billion from TARP, or a massive return of 267,208 percent.

Lets pretend for the sake of insanity that the $850,000,000,000 was a home loan. At 4.5%,30 years, the monthly payment would be $4,306,825,133.52. At $1,000,000,000,000 the monthly payment is $5,066,853,098.26. "Goodbye Dollar hello Euro!"

Florida’s Crossroads of Foreclosure and Despair

LEHIGH ACRES, Fla. — Desperation has moved into this once-middle-class exurb of Fort Myers, where hammers used to pound.

Its straight-ahead stare was hidden amid the chatter of 221 families waiting for free bread at Faith Lutheran Church on a recent Friday morning; and it appeared a block away a few days earlier, as laid-off construction workers in flannel shirts scavenged through trash bags at a home foreclosure, grabbing wires, CDs, anything that could be sold.

“I knew it was coming,” said Gloria Chilson, 56, the former owner of the house, as she watched strangers pick through her belongings. “You take what you can; you try not to care.”

Welcome to the American dream in high reverse. Lehigh Acres is one of countless sprawling exurbs that the housing boom drastically reshaped, and now the bust is testing whether the experience of shared struggle will pull people together or tear them apart.

The changes in these mostly unincorporated areas outside cities like Charlotte, N.C., Las Vegas and Sacramento have been swift and vivid. Their best economic times have been immediately followed by their worst, as they have generally been the last to crest and the first to crash.

In Lehigh Acres, homes are selling at 80 percent off their peak prices. Only two years after there were more jobs than people to work them, fast-food restaurants are laying people off or closing. Crime is up, school enrollment is down, and one in four residents received food stamps in December, nearly a fourfold increase since 2006. .......

Wow is right, Davos. I take it that was recorded on C-SPAN today? It's fascinating to hear Kanjorski offer a thoroughly plausible explanation for all the frenetic gyrations of Sept. and October, and I'm thoroughly disturbed to interpret what he says later in the interview to mean that we are still that close to a complete meltdown, because toxic assets continue to implode on banks. Do others interpret his comments similarly?

Wow is right, Davos. I take it that was recorded on C-SPAN today? It's fascinating to hear Kanjorski offer a thoroughly plausible explanation for all the frenetic gyrations of Sept. and October, and I'm thoroughly disturbed to interpret what he says later in the interview to mean that we are still that close to a complete meltdown, because toxic assets continue to implode on banks. Do others interpret his comments similarly?

Double wow with crisply burnt dollars on top! That is an amazing admission I had not seen from a representative before. This goes to show just how much our fiat money system, the power of the Fed, and the cozy relationship between the Fed and Congress is hidden even from congressmen and senators!

According to his hometown paper, Kanjorski gave that C-SPAN interview on Jan 27th. I was impressed to read that he voted against the latest stimulus bill and that he doesn't hesitate to call our current situation an economic collapse.

"This bill merely throws money at the problem by expanding existing programs," he said. "We have not taken the time to fully understand the nature and the full scope of the collapse of our economy, and we have not taken the time to understand how to target the problems with innovative solutions."

Kanjorski also believes that not enough money has been put into infrastructure improvements, as was first intended.

"Infrastructure projects were an initial focus of a recovery package, but that focus has dwindled to just $90 billion out of an $825 billion bill," he said. "For every $1 billion we spend in infrastructure, we create upwards of 30,000 jobs. It seems to me this is a proven method of creating jobs."

"And right now, the federal government -- working without a road map, and without a net -- is putting together a plan to keep U.S. banks from collapsing.

Not just to get the banks lending again. To keep them alive.

The government is expected to announce Monday a plan that analysts expect will include lifting soured mortgage assets off selected banks' books, possibly along with guarantees against other losses and maybe more direct injections of cash.

Financial industry experts say it is a matter of choosing the best of several options, none of them very palatable.

And no one knows for sure what will work because nothing like this has happened in living memory.

Getting it wrong could trigger a replay of what happened after Lehman Brothers collapsed last fall -- the stock market in free fall, seizure of the credit markets, ripples of layoffs. Perhaps even a run on other banks -- so many customers rushing to pull out their cash that it would make the bank run in "It's a Wonderful Life" look like, well, a feel-good holiday movie."

After months of only being able to find decent information on the blogosphere, I don't know whether to be relieved that the scope of this crisis is finally showing up on mainstream media's radar, or be very frightened that the precipice we are dancing on is now so glaringly obvious....

wow, that is quite an admission. I can only shake my head when I hear on tv that Madoff was the biggest Ponzi scheme in history when the biggest ones(Social Security and the U.S government) have yet to collapse. Scary.

Faber has a pretty good idea on the banking solution---that is, nationalize the good assets, with all depositors protected, and keep the bad assets within the banks, leaving investors to take the hit and the markets to work out whether these "casino financiers" live or die.

But as right as Faber is on the banking solution, he is laughably off-base on his assignment of crisis causality to "the government." More generally, I'm getting reeaaaally tired of hearing free-market apologists say this problem was created by too much government interference with interest rates and money supply. These guys know better---or at least they should. The Federal Reserve controls those things, and they are a private banking cartel.

Of course, the next layer of their argument goes, "yeah, but the Fed is controlled by the government." No, no, no. While it is true that the government is involved in policy coordination with the Fed, the inside-the-government part of that equation is stacked with players from Wall Street and banking. The revolving door that interchanges Wall Street execs and government execs on a regular basis ensures this. The private interests work the game from both sides.

Government activities related to banking and investing have been completely captured by Wall Street. The confirmation of Tim Geithner as Treasury Secretary---when the tax-dodge issue should have been enough to kill the nomination outright---is confirmation of who is calling the shots in this grand game. It is the plutocrats and bankers---the Alexander Hamiltons of the world. The Thomas Jeffersons of the world need not apply.